Analysis of McDonald's Business Environment: A Comprehensive Report

This report provides a comprehensive analysis of McDonald's business environment, examining its organizational structure, functions, and the impact of both internal and external factors. It begins by defining the business environment and its importance, then explores different types of businesses and their legal structures, focusing on public, private, and voluntary enterprises, with McDonald's as a primary example. The report then delves into the size and scope of various organizational types, followed by an explanation of the relationships between different organizational functions, such as marketing, production, human resources, finance, and sales, and their links to organizational objectives. Furthermore, it assesses the positive and negative impacts of macro-environmental factors, including political, economic, social, technological, legal, and environmental factors, on McDonald's operations. The report concludes with an internal and external analysis of McDonald's, identifying its strengths, weaknesses, opportunities, and threats (SWOT), and examining how these factors interrelate with the external macro environment.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Different types and purposes of the organisation with its legal structure..............................1
P2 Size and scope of range of different types of organisation....................................................2
LO 2.................................................................................................................................................3
P3 Explain relationship between different organisational functions and link with
organisational objectives and structure.......................................................................................3
LO 3.................................................................................................................................................4
P4 Positive and negative impact of macro environment which impact on business operations
supported with example..............................................................................................................4
LO 4.................................................................................................................................................6
P5 Internal and external analysis of specific organisation to identify strength and weaknesses 6
P6 How strength and weaknesses interrelate with external macro factors.................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment can be defined as the sum total of all external and internal factors
that are generally influence to the enterprise. Business environment has an important role in
success of the enterprise. In this consideration, organisation take place with realistic plans and
ensure that effectiveness will be gather that helps to lead several opportunities and threats. With
respect to discover and exploit opportunities, it can be stated that it helps to keep business alert
with approach and activities (Akter, Wamba and Childe, 2016).
Present is study based on McDonald's which is fast food company and considered several
operations in all over the world. With this consideration, the selected business is determine
operations and functions that are effective to promote desired level of outcomes.
In respect to focus on the present report, it covers different types of businesses and their
purposes that are important to accomplish goals. Furthermore, it demonstrates relationship
between different functions and its links with organisational objectives. Moreover, internal and
external environment analysis ascertained which would be helpful to assess strengths and
weaknesses.
LO 1
P1 Different types and purposes of the organisation with its legal structure
In the country, there are different types of businesses helps to increase economic growth
and development of organisation in positive consideration. In this regard, different kinds of
businesses explained under here: Public enterprise: Public enterprise is commonly accepted which determines an
undertaking of government owns and manages functions to maximise social welfare
which uphold public interest in the business. In order to deal in effective consideration,
their main aim is tom deal with public welfare services such as health care and those for
government working (Alles, Brennan and Vasarhelyi, 2018). For instance, Tesco is
private sector enterprise which deals in retail operations and functions and ascertained
with significant advantages to attract more customers and earn profit. Legal structure of
this kind of enterprise considered as sole trader because it is generally run by an
individual. Therefore, business profit made in which person is responsible to make
profitable outcomes.
1

 Private enterprise: Private enterprise integrated their functions as independent business
unit. In this consideration, they are working as independent company or private
individual. This type of business is fully organised which owned form of the greater part
in the business. Their main aim is to earn profits and revenue from different business
operations (Al-Saleh and Mahroum, 2015). For instance, McDonald's is public enterprise
which deals in fast food products such as soft drinks, milkshakes, etc. This public
enterprise consists legal structure with limited liability.
 Voluntary enterprise: Voluntary sector enterprise considered different operations and
functions in the business which ascertained to focus on voluntary activities. In this
regard, membership of the organisation determined as local charities, social enterprise
and volunteer led community businesses (McDowell, Harris and Geho, 2016). For
instance, World Vision of the company's one of the largest voluntary sector of UK which
demonstrate charity operations. Legal structure of the company is determined as business
partnership which demonstrate concern for further demonstration.
P2 Size and scope of range of different types of organisation
Every business sector operate with different scope and size. They are as follows: Private enterprise: McDonald's is an American fast food company which is operated in
restaurant and demonstrate effective functioning to develop more creativeness.
Furthermore, it is deals in more than 101 countries so that more than 36000 restaurants in
all over the world which deals in 69 million people in each and every day. Organisational
structure of the business successfully maintained that helps to lead with effectiveness that
reach through support corporate structure (Alsaad, Mohamad and Ismail, 2017). Public enterprise: Tesco consist different types of organisation's activities which is
fundamental element strategy. In this consideration, scope is also relates with extent of
the market in which products and services sold to expand business is different areas of
the world. The company is also covered wide market in Europe and Asia so that company
is global grocery which selling general merchandise retailer (Stott, Stone and Fae, 2016).
 Voluntary enterprise: Voluntary sector business consist different kinds of activities that
helps to deal in providing services which consist important consideration in the company.
It also assists to provide services in the community. These organisations also deal in
specific client group which helps to make a charge for their services in non-profit making
2

(Moroni, Arruda and Araujo, 2015). World's Vision consider their operations as sole
proprietorship and scope is developed to increase welfare of the community.
LO 2
P3 Explain relationship between different organisational functions and link with organisational
objectives and structure
Within the business environment, there are different kinds of organisational functions
which create link with each other to accomplish business objectives with ascertained right
structure in it. They are as follows: Marketing with production department: Marketing department need to work closely
with production department that helps to ensure adequate research and development
activities planned to satisfy current and future customer needs. In this consideration, item
can be manufactured in McDonald's with quality and design specification laid down by
consumers (Ifinedo, Pyke and Anwar, 2018). It is likely that marketing department will
set deadlines which helps to stretch the capabilities of the production department.
Marketers also need to get products to gain competitive advantages. As a result, it assists
to ensure that the organisation able to meet with health and safety requirements
(Appelbaum, Kogan and Yan, 2017). McDonald's has objectives to increase their profits
and customer attraction so that it regulate functions to developing marketing activities in
positive manner. Marketing with human resource department: Marketing department also need to work
closely with HRM so that they ensure appropriate skills and staffing levels are placed to
conduct research and development of new products ideas. In this regard, McDonald's
have opportunity to meet with production targets. It generally creates an ambitious and
competent sales teams (Keith, Unger and Frese, 2016). In HRM department a good deal
of recruitment and training demand across the organisation to create different activities in
other departments. As a result, it helps to ensure that significant advantages will be
ascertained in the business. Relationship of marketing with human resource successfully
develop to accomplish employees those are skilled and work to develop significant
advantages.
3

 Marketing with finance department: Furthermore, marketing department also need to
work closely with finance department that helps to ensure proper budget that assists to
meet with research, promotion and distribution (Lu, Wang and Xu, 2019). In this
consideration, financial department of McDonald's ensure that all business operates in
financial capabilities so that in all departments to work in its allocation of proper budget
is important. As all departments, profitable marketing opportunities emerge with year
(Marketing and its relationship with other business activities, 2018). As a result, it covers
all types of costs which paying back to investment as quickly as possible. Marketing with
finance function relate to accomplish business objectives that are consists to assess
budget amount to regulate different operations.
 Marketing with sales department: In addition to this, marketing considers important role
in the business to increase sales and revenue. With this regard, McDonald's considered
marketing of products and services to increase sales of the company. In this
consideration, research and development regarding products and services promotion is
essential so that sales increasing in positive manner at workplace (Begg, Van der Woerd
and Levy, 2018). The company has objective to increase their profitability and
productivity so that sales department ascertained their relationship with development of
business goals in order to conduct research and development program.
LO 3
P4 Positive and negative impact of macro environment which impact on business operations
supported with example
McDonald's deals in different areas of the world so that they need to concentrate on
identifying issues and problems related with external environment. In this consideration,
strategic management activities also ascertained which identify external factors that present
opportunities or threats (Lazonick, Hopkins and Tulum, 2017). Following are different elements
of macro environment factors which impact positively and negatively on the enterprise: Political factors: In the international market, McDonald's considered their operations and
functions which assists to look for development of the business to increase profitability.
With this regard, increasing international trade agreement is positive impact on the
business. Furthermore, government guidelines towards diet and health that impact
4

negatively on the organisation (Abrahamsen, Henneberg and Naude, 2016). The chosen
business has opportunity to expand its operations and functions with international trade
because of restaurant chain business. Furthermore, the company also regulating their
functions to gain competitive advantages with intensive growth strategies. Economic factors: In this aspect of factor, it can be stated that economic conditions and
trends create major effects on economic conditions of the country. In this regard, it can be
stated that slow but stable growth of the developed countries impact positively on
McDonald's. However, slowdown of the economy impact negative on the functions and
operations of the business (Yashkova, Sineva and Kolosova, 2016). It creates several
business opportunities that helps to expand high growth in countries. Social factors: In this aspect, it can be stated that social conditions support with
McDonald's business. Social trends generally influence consumer behaviours which turn
and affect to business in term of revenue. Rising disposable income is positive impact on
the business. Due to engaged lifestyle in urban environment, the organisation has positive
advantage to deal in effective functioning (Papilaya, Soisa and Akib, 2015). The selected
business ascertained their functioning which create negative effect of because of changes
in customers perception and trends. Technological factors: In terms of assessing technological impact, it can be stated that
related trends of the remote or macro environment of the businesses. In order to
maximise the benefits technological trends and resources which resources in effective
consideration. With this consideration, McDonald's has positive impact of technological
factor because of increasing business automation. It is also beneficial to increase sales
with using mobile devices (Dutt, Hawn and Mitchell, 2016). Research and development
activities continuously expanded that helps to lead with management and productivity
approaches. Lack of advance technology create impact on effective functioning of the
chosen enterprise. Legal factors: Legal factors are those which pertains to the impact of laws and
regulations on the firms. In this regard, it can be stated that changes in legal systems and
new shape of the businesses imposing with new requirements. McDonald's corporation
also consider legal external factors in the industry. As a result, increasing health
regulations at workplace create negative impact on the overall functioning (Begg, Van
5

der Woerd and Levy, 2018). With the help of rising legal minimum wages is element that
is major threat.
 Environmental factors: In this aspect of external environment, it can be stated that trends
are generally linked with natural environment. These trends affect McDonald's remote or
macro-environment. With the help of rising interest for corporate environmental
programs, the company has positive impact so that it assists to influence ecological trends
on the business and its consumers (Alsaad, Mohamad and Ismail, 2017). Increasing
emphasis on sustainable business strategies which helps to deal in innovative functions.
LO 4
P5 Internal and external analysis of specific organisation to identify strength and weaknesses
McDonald's consider effective operations and functions that helps to lead with specific
organisation. In this aspect, following strength, weaknesses, opportunities and threats exist in
McDonald's:
Strength Strong brand, image and reputation: McDonald's has built huge brand equity so that it is
no. 1 fast food company in term of sales. They are generally operated in more than
31,000 restaurants to serve beverages and fries in 120 nations. As a result, it is powerful
brand of the industry (McDowell, Harris and Geho, 2016). Large market share: McDonald's also considered as the largest player in size and global
reach. They continuously expand their operations and functions to increase market share
of the business so that brand successfully expanded that helps to cover large areas in all
over the world (Lu, Wang and Xu, 2019). Specialised training for managers: McDonald's also serious about their training
activities. Therefore, they are generally focusing on comply with own program that helps
to managers to considered most professional outcomes that helps to company for their
development. As a result, it is also powerful strength which assists to focus on significant
advantages at workplace (Papilaya, Soisa and Akib, 2015). McDonald's plan to win: McDonald's customers are also focused on plan to win that
helps to provide common framework for their global business expansion. In this
consideration, it can be stated that initiatives also undertaken which would be helpful to
6

demonstrate five elements such as plan, people, products, price, place and promotion.
The chosen company is also enhanced their experience in worldwide so that it delivers
strong results for the company's shareholders (Abrahamsen, Henneberg and Naude,
2016).
 Good marketing strategies: In addition to this, McDonald's also using good marketing
strategies that helps to lead with restaurant chain. In this regard, positive results will be
gain with considering wonderful marketing strategies among management which helps to
conduct appropriate market analysis.
Weaknesses Unhealthy food image: McDonald's also impacted by negative press because there is less
contribution within the society so that other fast food chain of the company gets more
affected. This is because, fast foods are not healthy because it is not contained any
nutritions. Customer looses due to competition: McDonald's also compete with many strong brand
in fast food industry. There is wide competition which makes McDonald's loose large
number of customers who prefer favour of other brands such as burger, col drinks, mac-
chicken, etc. Problem related with health issues: In addition to this, the chosen company has fat and
beef oil in their food. It affects badly on customers' health and impact negatively on them.
In this consideration, it can be stated that revenue of the company's is decreasing due to
problems related issues occurs continuously (Yashkova, Sineva and Kolosova, 2016). Legal action: McDonald's also involved in different number of lawsuits and other legal
cases exists in the course. For instance, there are many cases exists which involved in
trademark issue. The chosen company force many other restaurants so that company of
coffee shop to change their brand name because of different issues (Lazonick, Hopkins
and Tulum, 2017). High employee turnover: McDonald's also considered many good managers as skilful
employees so that turnover rate is very high. In every year, employees are fires out of the
restaurants. In addition to this, many others quit their jobs, especially part-time due to
low salary and high working pressure as well.
7

 Unbalance meal: McDonald's also tries to update their menu with healthy criteria.
Therefore, meals of the chosen business are still unbalanced. There are many dishes with
grilled and fried (Begg, Van der Woerd and Levy, 2018).
Opportunities Growth of fast food industry: Fast food industry is developing operations and functions
significantly. Changes of lifestyle leads to the change among people eating habit. From
the past, it can be seen that there are several students and children targets by the business
due to growth of fast food industry. As a result, it considers positive impact on the results
(McDowell, Harris and Geho, 2016). Conservation: McDonald's also need to conduct research which helps to determine green
energies and packaging solution. It also incorporates with findings which is important
part of marketing strategies and advertisements (Lu, Wang and Xu, 2019). Globalisation, expansion in other nations: McDonald's consider more than 31000
restaurants which serve in more than 120 nations. Therefore, they can operate more
restaurant in different areas which helps to influence customers and ascertained with
positive advantages. In this regard, it can be stated that expansion in these areas is the
biggest opportunities for the business (Abrahamsen, Henneberg and Naude, 2016).
 Low cost menu which is preferred by large number of customers: People are also
concern which influence badly on health. As a result, company can develop new products
that are related with health consideration in large number of customers.
Threats Intensity competitors: In addition to this, development of fast food industry is
continuously expanded in market so that it creates high competition in different areas.
Therefore, it impacts negatively and threat to McDonald's. For instance, Burger King,
Wendy's, etc. Public health crisis: With growing number of obesity in different cases of Americans,
fast food chain of the chosen business continued overshadowed with previous products
offering. For instance, supervised meal, no fruit or Yogurt, slim salad, etc. (Alsaad,
Mohamad and Ismail, 2017). Economic recession: Furthermore, revenue stream of the company is also diversified
which depends on length of recession. It will inevitably create negative impact on the
8

functions which determines different issues as well. Recession or down turn in economy
effect on retailers’ sales so that household budget tighten which diminish number of
visitors.
 Serious environmental issues: Environment is one of the issue which impact in all over
the world. In this regard, it can be stated that any action which influence in human life
also criticised strongly (Yashkova, Sineva and Kolosova, 2016). Consequently, if
McDonald's lose customers due to this issue.
P6 How strength and weaknesses interrelate with external macro factors
In order to determine interrelationship between strength and weaknesses with external
macro factors, following description considered in it:
Strengths
 Firstly, it can be stated that saturated in US demonstrate that McDonald's has greater
expansion capabilities in all over the market. Hence, market development is one of the
important strategy to the business which must be implement in it. Company also prepare
international strategy which helps to focus on populated areas which deals in different
countries (Lazonick, Hopkins and Tulum, 2017).
 Furthermore, there are different areas in which McDonald's continuously expand their
functions and operations in fast food sector so that it helps to lead with potential
expansion. China is one of the market where country's population is very high so that the
chosen company has advantage to lead with overall effectiveness (Papilaya, Soisa and
Akib, 2015). McDonald's can easily develop more and more in Asia so that it is huge
advantage to gain market share which considered in economy factor.
 Another strength of the company is name recognition so that there are a million people
familiar with Golden Arches that are on top within the restaurant. McDonald's also use
this advantage to gain more customer attraction because political stability in the country
assists to bring large profit for the selected enterprise. In this consideration, developing
new kind of food in business assists to gain more success (Alsaad, Mohamad and Ismail,
2017).
 Along with this, aside from exploiting brand name, company can easily use sources that
are promoted by the restaurant. With the help of positive social factors, it can be stated
that service skills of employees take important part in the business. In this consideration,
9

it can be stated that introduction of new production system successfully develop that
helps to lead in effectiveness (Begg, Van der Woerd and Levy, 2018).
 McDonald's also need to concentrate on development of stronger outcomes that helps to
lead with diversify their products that are regularly competing with stronger and have
new products gradually. This is because, the company need to be spend more in creating
new products and services which increase efficiency in the operations which is done by
technological factor. Furthermore, McDonald's also need to focus on place their product
for kids which helps to develop profitability and targeting them with more effectiveness.
Weaknesses
 However, due to changes in customers demand and requirements, McDonald's get more
affected so that it create negative impact on their services. It is harder to capture
customers demand and requirements all the time. This is because, customers perception
change continuously which create impact on potential outcomes and results.
 Furthermore, there are several changes occurs in business rules and regulations so that it
highly impact on employee turnover. Most of the jobs in the business are low skilled and
paying so that significant amount of employee turnover is continuously increasing. There
are several employees not taking their job seriously so that it impact negatively in short
period of time. It also leads with lower performances which increase turnover, training
costs high, etc. (Abrahamsen, Henneberg and Naude, 2016).
 Company's technological position also impact on their different short and long term plans
because in different locations. This is because, in different areas technological issues
create negative impact on outcomes and results in the business. As a result, it is essential
to lead with expansion which is helpful to attain creativeness in the overall effectiveness.
 Furthermore, in different areas of the world, the chosen business face high competition
which create negative impact on overall effectiveness with economy factor. In this
consideration, it can be stated that McDonald's face significant competition from
national, international, regional etc. Hence, environmental and legal factors of different
locations majorly impact on overall effectiveness of the business (Papilaya, Soisa and
Akib, 2015).
10

CONCLUSION
From the above report, it can be stated that McDonald's is one of the largest business
which deals in fast food chain. In this regard, it can be stated that in UK different types of
business operate in market which ascertained to accomplish their own purposes. For instance,
private, public and voluntary organisation continuously operate which lead to gain desired level
of effectiveness at workplace. Furthermore, it summarised about scope and size of different
businesses which operate successfully in the market. Moreover, relationship of different
organisational department considered that helps to lead with overall business functions and
operations. In addition to this, it articulated about internal and external environment analysis that
lead to gain more success in different areas of the UK market. At last, report demonstrate
discussion of interrelationship between external macro environment and strength & weaknesses
of the firm.
11

REFERENCES
Books and Journals
Abrahamsen, M. H., Henneberg, S. C. and Naude, P., 2016. Network picturing: An action
research study of strategizing in business networks. Industrial Marketing Management.
59. pp.107-119.
Akter, S., Wamba, S. F. and Childe, S. J., 2016. How to improve firm performance using big
data analytics capability and business strategy alignment?. International Journal of
Production Economics. 182. pp.113-131.
Al-Saleh, Y. and Mahroum, S., 2015. A critical review of the interplay between policy
instruments and business models: greening the built environment a case in
point. Journal of Cleaner Production. 109. pp.260-270.
Alles, M., Brennan, G. and Vasarhelyi, M. A., 2018. Continuous monitoring of business process
controls: A pilot implementation of a continuous auditing system at Siemens.
In Continuous Auditing: Theory and Application (pp. 219-246). Emerald Publishing
Limited.
Alsaad, A., Mohamad, R. and Ismail, N. A., 2017. The moderating role of trust in business to
business electronic commerce (B2B EC) adoption. Computers in Human Behavior. 68.
pp.157-169.
Appelbaum, D., Kogan, A. and Yan, Z., 2017. Impact of business analytics and enterprise
systems on managerial accounting. International Journal of Accounting Information
Systems. 25. pp.29-44.
Begg, K., Van der Woerd, F. and Levy, D. eds., 2018. The business of climate change:
Corporate responses to Kyoto. Routledge.
Dutt, N., Hawn, O. and Mitchell, W., 2016. How open system intermediaries address
institutional failures: The case of business incubators in emerging-market
countries. Academy of Management Journal. 59(3). pp.818-840.
Ifinedo, P., Pyke, J. and Anwar, A., 2018. Business undergraduates’ perceived use outcomes of
Moodle in a blended learning environment: The roles of usability factors and external
support. Telematics and Informatics. 35(1). pp.93-102.
Keith, N., Unger, J. M. and Frese, M., 2016. Informal learning and entrepreneurial success: a
longitudinal study of deliberate practice among small business owners. Applied
Psychology. 65(3). pp.515-540.
Lazonick, W., Hopkins, M. and Tulum, Ö., 2017. US Pharma's Financialized Business Model.
Lu, Y., Wang, H. and Xu, X., 2019. ManuService ontology: A product data model for service-
oriented business interactions in a cloud manufacturing environment. Journal of
Intelligent Manufacturing. 30(1). pp.317-334.
McDowell, W. C., Harris, M. L. and Geho, P. R., 2016. Longevity in small business: The effect
of maturity on strategic focus and business performance. Journal of Business Research.
69(5). pp.1904-1908.
12

Moroni, I., Arruda, A. and Araujo, K., 2015. The design and technological innovation: how to
understand the growth of startups companies in competitive business
environment. Procedia Manufacturing. 3. pp.2199-2204.
Papilaya, J., Soisa, T. R. and Akib, H., 2015. The influence of implementing the strategic policy
in creating business climate, business environment and providing support facilities
towards business empowerment on small medium craft enterprises in Ambon
Indonesia. International Review of Management and Marketing. 5(2). pp.85-93.
Stott, R. N., Stone, M. and Fae, J., 2016. Business models in the business-to-business and
business-to-consumer worlds–what can each world learn from the other?. Journal of
Business & Industrial Marketing. 31(8). pp.943-954.
Yashkova, E. V., Sineva, N. L. and Kolosova, T. V., 2016. Development of Innovative Business
Model of Modern Manager's Qualities. International Journal of Environmental and
Science Education. 11(11). pp.4650-4659.
Online
Marketing and its relationship with other business activities. 2018. [Online] Available through:
<http://www.sanandres.esc.edu.ar/secondary/Marketing/page_14.htm>.
13